Grybauskaitė: EU leaders 'mentally ready' for budget deal

EU leaders agreed at a summit last week to finalise negotiations for the EU long-term budget next spring, Lithuanian President Dalia Grybauskaitė, a former EU budget commissioner, said in an exclusive interview.

Dalia Grybauskaitė became Lithuania's president in 2009. A former vice minister of foreign affairs and finance minister, from 2004-2009 she was the European Commissioner for Financial Programming and the Budget. She spoke to EurActiv Editor-in-Chief Daniela Vincenti.

EU leaders are ending the year with a sense of achievement: found a compromise to create a single supervisor for their banks and they have released €49 bn tranche in aid for Greece, will we start the year in 2013 with the same feeling of accomplishment looking ahead to adopting the EU long-term budget?

What we have achieved at this Council is only one of the many steps that are necessary. We talked and confirmed plans for 2013—the so-called roadmap--including creating and deepening the EMU, banking supervision elements that are not finalized yet, but we have agreed that they will be.

The real job will be achieved in 2015 and probably some elements will be implemented in 2014.So most of the elements of the roadmap will fall in our presidency [Lithuania will assume the six-month rotating presidency of the EU, starting on 1 July 2013].

The roadmap has been agreed, but the road we have chosen is long and we have only stepped on the very beginning of it. We are on this road together and we will need to be on it for a year or two to create a real banking union and guaranteeing an economic recovery and jobs’ growth.

The November summit on the EU budget ended without a deal. How to make sure the next one in February will not resemble a Turkish bazaar as some compared it to?

I would not call it that way. I have been very deeply involved in multi-annual financial framework negotiations before and I can say that these are always rather difficult, taking place always in very difficult circumstances. This time, they are happening as Europe is experiencing serious economic difficulties.

It is therefore very natural to be unable to finalise a deal at the first attempt. The last failure was very predictable—we had very few chances to agree in November. But now the situation has changed. We have agreed on a roadmap for the banking union. We have set a number of goals that will be delivered only by June 2015.

We have also agreed to finalise negotiations [for the EU budget] in the spring [2013].

If I understand you correctly the summit in February will not finalise an accord on the MFF, but would just be a stepping stone towards an agreement in the spring?

Let’s not prejudge. But EU member states are mentally ready to have an agreement in the spring.

The EU budget is €973 billion, only 1% of GDP compared to EU national public spending standing at roughly 50%. It seems a drop in a bucket. Would you say that the overwhelming attention paid to the size of the budget is misplaced?

The 1% figure, a little bit above or below is really not the importance. The symbolism of the European budget is about the quality of spending—the added-value of EU spending. If you spend just for consumption, the one euro you spend will remain one euro. But if you invest that one euro in ICT, trans-European networks etc. that euro can turn into 8-10 euro.

The main aspect is therefore the added-value of European investments. That is why the European budget is much different [from national budgets]. That 1% GDP can generate maybe 10-20% of European investments. You have to look at the European budget in terms of quality and added value.

Precisely, let’s take the qualitative approach. The latest Van Rompuy paper showed reductions in figures for ‘competitiveness for growth and jobs’ and the Connecting Europe Facility, while increasing agriculture and cohesion funds. Are we not going back to business as usual?

It is not only business as usual. It is pitiful business as usual. All member states understand the importance of strategic projects for Europe - they understand the competitiveness’ investments and interconnection facilities because that gives European spending added-value.

But when they are at the negotiating table, leaders want to strike a balance between what they pay and what they receive. That is a pity - the pressure of national interest overwhelms strategic thinking about the common interest and overshadows the priorities on what Europe needs.

Having held the hat of EU budget commissioner in the past and having witnessed negotiations so far as head of state, if you could go to the drawing board, considering the current crisis, where would you put the money?

I will try to persuade again EU leaders that you cannot treat the EU budget in the same way you treat national budgets. You cannot treat EU spending using the same parameters for evaluation –especially effectiveness evaluation – in the same way you do in national budgets.

European spending is supposed to give European added-value to the European Union as a whole, to all regions. You cannot just invest in poor regions and members—or spend on small and inefficient policies mainly to drive consumption, which can be done by national budgets.

Which policies are you thinking about?

I mainly think of policies that are not much modernised, that are still dominating EU budget spending - like agriculture policy.

What about if CAP would be reformed as to be more market-oriented to stimulate competitiveness and be more geared towards innovation, productivity, resources efficiency and climate mitigation, as businesses want?

You know yourself that after each agriculture spending reform period – usually every 10 years - the CAP instead of becoming more efficient has become by €10 billion more expensive and not very efficient.

Up to 11 countries, including the UK, have until now threatened to wield a veto on the EU budget if their demands were not met. How to avoid a deadlock?

Such negotiations because of unanimity always have a risk of deadlock. But all of us, including paymasters and beneficiaries, must understand that annual budgets in the European Union are inefficient and impossible. That is why Delors during his time introduced multi-annual budget, which allow to commit to multi-annual projects. Then annually you negotiate payments - how much you need for the realisation of these agreed programmees.

Before Delors, the EU was negotiating its budget every year. If we would not have the multi-annual financial framework we would be battling at every council meeting –not solving any of the EU.

I am sure we will find a compromise and agree soon or later in a responsible way - but after many members would have played their media game for their national market .

If no agreement is found early next year, will there be a delay in the preparation of the strategic plans each member state puts together to explain how it intends to use Structural and Cohesion funds? Will that have a bad impact on growth and jobs at a moment Europe is struggling to get out of the crisis?

Exactly, if now compromise is found, it will be at the price of new projects that would be able to redress the EU economy. We would only be able to finance old programmes. That means that new fresh money that is normally reinvested in the EU countries, for their businesses and for their people will be delayed for at least a year or two. It depends how long negotiations will last and when a compromise if finalised.

Those countries threatening the veto, do it more for public massive demonstration , but in reality they go against their own interest because fresh money will not aliment their own economy.

Considering the current economic crisis, do you think we will ever see the day, when the Union will see a flexible budget and a reformed revenue system based on updated priorities? And how far are we from giving the EU its own resources?

Own resources is the dream of all parliamentarians - not only European but also nationals - to have the possibility to move unused money from one line to another. But here we are facing some responsible discipline. [Flexibility] is surely a dream for many, but not for paymasters of the European budget.

We need to find an optimum balance between responsibility and efficiency—on how the European budget is used. This has always been a battle. But it is not a peculiarity of the European budget. It also happens every year at national level. It is a permanent problem.

This week the EU was awarded the Nobel peace prize. Although peace is surely important, the priorities seem to have shifted in the last decades. There is a feeling that we are in it together not just for peace, but more for prosperity and power in an increasingly multi-polar world. Would you agree?

Europe has indeed been in peace for more than 50 years. But some new member states have been in peace only for the last 20 years. Take for example the Baltic states: we have been occupied for many years. Twenty-two years ago we have seen the tanks entering our cities and we have witnessed bloodshed in our streets.

For other member states—or future member states—like Croatia, they have seen peace only for the past 10 years.

So, Europe and our immediate neighbours has very sensitive memories of how difficult it is to maintain peace. There is no prosperity without peace. We cannot isolate ourselves and think we are absolutely secure from conflicts.

Europe supports peace in other areas of the world, Europe supports and helps refugees of other countries that are not in peace. This element cannot be separated from everything else. Peace – social, moral, military - and now with the crisis, peace with our citizens. We need to seek with our citizens peace and understanding in supporting difficult measures, cuts - that we are forced to make in countries like Greece.

We need to seek peace with our people nowadays, also with religions, minority groups. Peace is a permanent element in our daily life.

Do you favour further more political Integration? And why? How to convince Europeans that this what we need? And starting to negotiate a change of treaty after the 2014 elections isn’t that too late?

I would say that there is a need for an identity discussion. Do we need to start from political integration or come to it via natural economic integration.

After the second World War, when the EU was created, we had both goals - have an economic union to guarantee peace and prosperity for people and this was able to be done only with some level of political union.

For me these two strands are very close. It is sure that Europe can only survive through deepening economic integration. Political integration will come after or in parallel. I don’t think we should distinguish political and economic integration as they are related and connected.

Last but not least, in a previous interview you told me that the EU was an overgrown teenager. What will it take for Europe to grow into a mature adult?

I have said that at the time, also thinking of my own country. It all depends on how countries react to the reality around us. If we manage to evaluate ourselves, we see that instead of predicting events, we are running after them.

We are pushed by objective circumstances around us. The world is so dynamic, but Europe is not so much following the same pace. We have a permanent necessity to mature. Everyday we have to try to adapt to the challenges around us.

The question of maturity is our daily challenge of tackling issues responsibly.

2013: your vision for the future and the Lithuanian presidency of the EU in the second half of the year? What do you want your legacy to be?

Honest brokers. We will need to be solutions-oriented, solving problems which we would have inherited. To that you add our own agenda: To show that new member states can manage as well as experienced ones. We are small, our capacities are few, but we have the ambition to be honest brokers and make a difference.

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